The year 2020 presented many defining moments—and unprecedented challenges—for the trucking industry. The last vestiges of the old paper logbooks finally disappeared as trucks nationwide upgraded to standardized electronic logging devices. Drivers and fleets adjusted to new hours-of-service rules regulating how long they could drive, when to take rest breaks, and when to shut down for the night (or day). States increased tolls and fees. Rising insurance rates and “nuclear verdicts” drove some carriers out of business. Congestion and a crumbling national infrastructure made the job that much tougher.
Then the pandemic hit, further roiling the industry but also shining a well-deserved spotlight on truckers as heroes of the supply chain, stepping up to ensure medical supplies, equipment, and essential goods continued to be delivered during the public health crisis.
Through it all, one fundamental question continued to dog the industry: Where are the drivers? Once again in 2020, trucking saw more experienced, veteran drivers call it a career, exacerbating a shrinking driver pool as far fewer younger men and women entered the profession to replace the retirees. Covid-19 also played a part. In exit interviews, some older at-risk drivers cited worries about the job’s exposure to the public amid rising infection rates, while others left the business to care for family members or relatives who had contracted the virus.
FINDING TOMORROW’S DRIVERS
What can shippers and motor carriers expect as they navigate through 2021? Many of the same challenges from last year, with reinvigorating the driver workforce at the top of the list.
For truck lines to be able to provide sufficient capacity to meet the market’s continued demand, it’s all about getting more professional drivers behind the wheel, notes Greg Orr, executive vice president of U.S. truckload for TFI International. Retention and making sure drivers are utilized efficiently and are paid for every hour they work and mile they drive are the key priorities, he notes.
At Joplin, Missouri-based CFI, a TFI truckload subsidiary with some 2,150 trucks, 7,300 trailers, and 2,300 drivers, “we’re really focused on the driver experience, giving them support at all times, reducing downtime, and keeping them moving,” Orr says.
With new recruits, CFI has adopted what Orr calls a “white glove” service, essentially an aggressive orientation program “designed to create a positive experience for the new driver, with constant engagement to ensure they’re developing successfully. It’s like a concierge service,” he notes, adding that new recruits spend their first 90 days on the road with an experienced driver as a mentor.
A similar program of outreach, support, and communication is in place for current drivers as well. The focus (along with competitive pay): keep them engaged and connected; recognize, and help them overcome, the challenges of the job; and most importantly, show them respect and appreciation for the work they do. The result: CFI’s turnover ratio is down 15 percentage points from last year.
Demand for freight trucking services soared in the second half of 2020 and will likely continue strong through most of 2021, Orr believes. “We are starting the day with 105% to 115% [of available capacity] pre-booked,” he notes, adding that in the current market, CFI is rejecting more than 400 loads a day for lack of capacity. “There’s a ton of freight coming in from the ports and from [domestic] manufacturing. This will ultimately challenge a lot of distribution networks.”
IS PAY BY THE MILE BECOMING OBSOLETE?
Average length of haul (read available pay miles) is decreasing for truckload carriers as e-commerce–influenced distribution networks shrink point-to-point moves and become more regional in design, with more smaller warehouses sited closer to each other and end-users. That’s raising the question of whether the industry’s traditional model of pay by the mile for most truckload driver earnings needs to be changed or perhaps blended with other forms of pay.
“Pay is market driven. You have to be competitive,” says Todd Jadin, vice president of talent management and employee relations for Green Bay, Wisconsin-based Schneider Inc., one of the nation’s largest truckload carriers. “Time is such a key component of a truck driver’s day. We have to look at ways to deal with time and distance components,” he says. “How do you align those to make sure you’re giving the driver a market-competitive wage?”
Moves toward salary pay, daily rates, and guaranteed pay are finding increased traction among some carriers. The most important factor, Jadin believes, is “providing a predictable work schedule” with commensurate predictability in pay. “Take out the variability where possible,” he advises, and build “good, solid, respectful relationships with drivers.” Jadin expects driver pay to stay on an upward trend in 2021, adding that “you will continue to see innovative and unique ways to address driver pay.”
Can a truckload carrier fully switch its drivers from mileage pay to salary? For Ed Nagle, president and chief executive officer of Walbridge, Ohio-based Nagle Companies, the answer is yes. “We are an irregular-route carrier that runs a fair amount of multistop loads in the refrigerated sector,” which, he explains, is one of the least driver-friendly segments of the market.
In Nagle’s business, detention—primarily at consignees’ facilities—is a huge problem. Drivers might have had three to five stops per load but because of shippers missing their appointments and unloading delays, they were experiencing 15 to 20 hours a week of wasted time and excess detention, he says. Under the mileage pay structure, drivers earned a bonus over 2,000 miles a week—yet were penalized for delays not of their doing. “Drivers felt pressure to get those miles in even with the [excessive] detention. We were losing drivers, and the general mood among drivers was not the best,” he recalled.
Nagle made the decision in 2017 to move his drivers to salary pay—and hasn’t looked back. He switched to a model based on linehaul revenue per truck per week. “Most of our major costs were [relatively] fixed, so whether it was 250 miles or 450 miles, that truck had to generate a certain amount of revenue per day. It was on us [the management team] to convey that to our customers,” which also led to conversations on how to reduce excess detention.
Today, new drivers at Nagle start with a base salary of $1,400 a week and within six months, depending on performance, can earn an increase to $1,500 a week. They can also qualify for safety and fuel-efficiency bonuses of up to $4,400 per year.
Four years on, Nagle has no regrets about his decision. “More than anything else what our drivers love most about the salary is the financial predictability,” he says, noting that the move brings his company’s pay practices more in step with other industries. “What other professional has a 20% swing in their weekly paycheck based on mileage or when the paperwork was received?”
BUILDING A BASE
In addition to rethinking pay practices, carriers have had to get creative in their recruitment strategies, particularly when it comes to millennials. “It’s been challenging bringing new blood back into the truck driving industry,” says Dave Bates, senior vice president, operations for less-than-truckload (LTL) carrier Old Dominion Freight Line (ODFL). “Seems these younger kids don’t want the manual labor-type work. … They don’t like the look of driving a truck. They’d rather have a computer-based job.”
That hasn’t stopped Thomasville, North Carolina-based ODFL from doubling down on its in-house driving training schools to refresh and grow its driver workforce. The schools draw primarily from ODFL dock workers, who, if they express an interest and are a good cultural fit, are invited to attend the school. The program consists of classroom and behind-the-wheel instruction, leading to a commercial driver’s license exam, which, if passed, enables them to join the ranks of professional LTL drivers—with a significant increase in pay.
The company currently has about 150 students in training and another 100 candidates ready to start, Bates notes. In this market, Bates has found that to acquire new drivers, “we are basically going to have to build them ourselves.” He adds that for already-experienced driver applicants, “[knowing how to] drive a truck will get you in the door for an interview; the hard part is proving you have what it takes to be an ODFL driver and that you fit our culture. That’s the most important thing to us.”
ODFL and other LTL carriers have one recruiting advantage over their truckload counterparts in that the LTL model allows drivers to be home every night and sleep in their own bed, Bates notes. Yet it is still a physically and mentally challenging job, where drivers might bump 15 to 20 customer docks a day.
Bates says ODFL’s focus has been on ensuring competitive, market-based wages, increasing about 3.5%, on average, a year since 2009, as well as sweetening other parts of the total compensation package. “We try to do something to improve the package every year,” he says, noting that in 2020 that included adding two holidays and increasing the company contribution to employee 401(k) accounts.
He added that during the initial surge of Covid-19, the work environment became that much more challenging as shippers, fearing the virus’s spread, would not let drivers enter offices or use break rooms or bathroom facilities. In some cases, wait times also became extended, with drivers having to wait in line over six hours to make deliveries to some big-box retailers.
Over the intervening months, however, instances of drivers being denied basic amenities at shippers’ docks abated. Businesses mostly worked out the kinks of their Covid safety protocols, use of personal protective equipment (PPE) became widespread, and both shippers and drivers became more comfortable with the new environment of personal hygiene, masking, social distancing, and no-touch deliveries.
IT’S STILL ABOUT THE MONEY
John Luciani, chief operating officer for LTL solutions at West Chester, Pennsylvania-based truck line A. Duie Pyle, echoes the basic point being made consistently by many trucking executives. “The industry across the board has to find ways to increase driver pay. That’s one sure thing that will attract more [people] to the industry,” he says, noting that in addition to competitive wages and benefits, Pyle also provides a career path by developing some of its own drivers through its “driving academy.”
With turnover under 10%, A. Duie Pyle considers employee engagement and retention practices a function of its culture and one of its strong suits. Yearly adjustments to its compensation package help support strong new-hire rates as well. In addition to a market-competitive annual pay increase, the company last year shortened its LTL wage progression to top pay from two years to six months. “That’s especially helped with recruiting experienced drivers that worked at other carriers and were reluctant to walk away from top scale they were earning there,” he notes.
Luciani added as well that one sometimes overlooked factor in driver retention is the type of freight you haul. “It’s an opportunity cost” as well as an employee satisfaction factor, he says. “We focus as much on what we don’t put on the truck as what we do,” he adds, noting that the freight that’s the most difficult for the driver to handle is often the costliest to service as well. It’s a “quality of the work” issue that when properly managed, can ensure higher profitability and happier drivers.
At the end of the day, higher pay, respect for their skill and perseverance, and recognizing professional drivers for their value to a working economy will tip the scales. That also means that shippers will have to do their part by partnering with their carriers to eliminate detention time that results in money-costing delays.
PAYING THE “RIGHT PRICE”
Despite carriers’ efforts, the compensation issue continues to bedevil the industry. “Driver pay is still lower than it needs to be,” observes Jeremy Reymer, president of Driver Reach, which provides recruiting and compliance software to trucking firms, noting “they only have so much capacity to earn in a given day or week.”
Satish Jindel, president of research firm SJ Consulting Group, agrees. Asked about the trucking industry’s ongoing labor challenges, Jindel says the issue isn’t a shortage of drivers; it’s an issue of an industry’s “not paying the right price” to attract qualified drivers. “No one else in our society can really understand the quality-of-life issues these warriors on the road experience every day,” he says. “Every minute they have to be alert. No other job requires that level of concentration. If the industry paid what people are willing to drive for, we wouldn’t have a shortage.”
